Staying Abreast With International Developments
The Canadian regulator, the Office of the Superintendent of Financial Institutions (OSFI), has proposed changes to its capital and liquidity approach to crypto-assets. The proposed new approach aims to reflect an evolving risk environment and international developments. OSFI has released two draft guidelines for public consultation: one focuses on the regulatory capital treatment of crypto-asset exposures by regulated deposit-taking institutions, and the other is targeted at insurers. The draft guidelines are in response to new banking standards for crypto-asset exposures unveiled by the Basel Committee on Banking Supervision. The guidelines are expected to take effect in early 2025.
New Guidelines to Bring Clarity
The Superintendent of Financial Institutions, Peter Routledge, stated that deposit-taking institutions and insurers need clarity on how to treat crypto-asset exposures in terms of capital and liquidity. The new guidelines propose two approaches: a simplified one and a more comprehensive one, depending on the extent of an institution’s exposure to crypto-assets. The guidelines also outline the four classes of crypto assets and their respective capital treatment. While the new guidelines are not yet in effect, the Aug. 2022 interim advisory will remain in effect until they are implemented.
Your Hot Take:
The proposed changes to the capital and liquidity approach to crypto-assets by the Canadian regulator, OSFI, aim to bring clarity to deposit-taking institutions and insurers. These new guidelines, which are open for public consultation, will reflect international standards and address the evolving risk environment. By providing two approaches and outlining the capital treatment for different classes of crypto assets, the guidelines will help institutions navigate their exposure to crypto-assets. It’s important for crypto readers to stay informed about these international developments, as they will have an impact on the regulatory landscape surrounding cryptocurrencies.
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